20.) Sam and Abby are dependents of their parents, and each has income of 2,100 for...

20.) Sam and Abby are dependents of their parents, and each has income of 2,100 for the year. Sam's standard deduction for the year is 1,050, while abby's is 2,450. As their income is the same, what causes the difference in the amount of the standard deduction?

21.) Compute the 2018 standard deduction for the following tax payers

a.) Maggie is 15 and claimed as a dependent by her parents. She has 800 in dividends income and 1,400 in wages from a part time job.

b.) Ruby and woody are married and file a joint tac return. Ruby is age 66, and Woody is 69. Their taxable retirment income is 10,000

c.) Shonda is age 68 and single . She is claimed by her daughter as a dependent. Her earned income is 500 and her interest income is 125.

d.) Frazier, age 55 is married but is filing a seperate return. His wife itemizes her deductions.

Solutions

Expert Solution

Answer : 20

Sam's $2,100 is unearned income and therefore he is allowed the minimum standard deduction of $1,050.

Abby's $2,100 is earned income, therefore she is allowed a $2,450 [$2,100 (earned income for the year) + $350] standard deduction

Answer : 21

A. Standard deduction = $1750. When filing her own tax return, Maggie is limited to the greater of $1,050 or $1,750 (earned income +350)

b. Standard deduction = $26,600. A taxpayer who is age 65 or over or blind in 2018 qualifies for an additional standard deduction of $1,300. Ruby and Woody’s standard deduction is $24000 plus the additional $1,300 for Ruby being age 65 or older and another $1,300 for Woody’s being age 65 or older.

c. Standard deduction = $2,350. When filing her own tax return, Shonda is limited to the greater of $1,050 or $850 (earned income + 350). A dependent who is 65 or older or blind is also allowed the additional standard deduction of $1300 on his or her own return. Therefore, Shonda’s standard deduction is $2,350 ($1,050 + $1,300).

D. Standard deduction = $0. Frazier is ineligible to use the standard deduction and therefore must itemize because he is married filing a separate return when his spouse itemizes deductions. Both spouses must itemized deductions or claim the standard deduction if married, filing separately.

ekkarill92 answered 1 year ago

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